After the Coalition lost the 1993 election, John Hewson's position as leader of the Liberal Party came into question. Downer successfully challenged for the leadership in May 1994, thus becoming Leader of the Opposition. He initially had high approval ratings, but after a series of gaffes resigned the leadership in January 1995 and was replaced by John Howard. He was the first Liberal leader to fail to lead the party to an election, and remains the shortest-serving leader in party history.

Downer held a number of positions on the Opposition front bench from 1987 onwards. When the Liberals unexpectedly lost the 1993 election to Prime Minister Paul Keating, after the election Downer became Shadow Treasurer replacing Peter Reith who had resigned from the portfolio.[6] During this time, Downer began to be talked of as a possible leader, and in May 1994 he succeeded John Hewson as leader of the Liberal party after defeating him in a leadership ballot. (Hewson intended to resign if the Coalition lost the 1993 election, but continued on regardless.)

As Liberal leader, Downer initially attracted record levels of public support, even when incumbent Prime Minister Paul Keating launched a series of attacks on Downer's privileged background.[7] Then aged forty three, he was perceived as a fresh-faced alternative[citation needed] to a government in its 12th year of power.

Several months after becoming leader Downer's support base was quickly eroded, however, by a series of embarrassing public blunders. One was the emergence of a 1987 speech to the far-right Australian League of Rights.[8] Another was the sacking of John Hewson from the shadow ministry in August 1994.[9] . During 1994, Downer expressed interest in repealing the Mabo Legislation if elected at the next federal election due to be arranged by 1996.[10] A damaging incident emerged from a formal dinner attended by Downer. While promoting the Liberal slogan "The Things That Matter", in a reference to abusing husbands, Downer quipped that the party's domestic violence policy would accordingly be named "The Things That Batter". Downer also found it difficult to handle the gulf between monarchists and republicans in his own party but resolved the dispute by promising to establish a constitutional convention to consider the issue. By the end of 1994, his approval ratings had dwindled to 34 percent after being as high as 53 percent.[citation needed]

On 9 January 1995, internal Liberal Party polling showed that with Downer as leader, the Coalition had a slim chance of holding its marginal seats in the next election, let alone of winning government. On 11 January, Downer launched a major policy statement with ten policy commitments and criticised Liberals he saw as undermining his leadership. Downer negotiated in mid-January with now back-bencher Hewson, but this resulted in Hewson publicly declaring he wanted the shadow Treasury portfolio, which was held by Downer's deputy, Peter Costello. On 26 January 1995, he resigned as Liberal Leader and John Howard was elected unopposed to replace him. Downer pledged his support to Howard and said he would "kneecap" anyone who undermined Howard's second attempt at winning the prime ministership.[11]

With a tenure of just over eight months, Downer is to date the shortest-serving leader of the federal Liberal Party.
He is also, alongside Brendan Nelson, one of two federal Liberal leaders never to lead the party into an election. On opposition leadership, he said in 2008, "The moment when I wanted to [leave] was just about the first day I started in the job. There was many a time from the first day onwards when I thought to myself, How the hell can I get out of this?"[12]

Downer is also the only Liberal leader to become a minister after his tenure as leader had concluded and not before and duration of it.

Given choice of cabinet position[7] in the incoming Howard government elected in March 1996, Downer became Minister for Foreign Affairs, a position he held until 3 December 2007. He became the longest-serving Foreign Minister of Australia on 20 December 2004.

One of Downer's earliest initiatives as Foreign Minister was to work with New Zealand to broker a peace agreement in Bougainville, Papua New Guinea, which ended a long running civil conflict.

It's pretty hard to say on the one hand that we feel very strongly about Pakistani and Indian nuclear testing and on the other hand the U.S. Senate won't ratify the ...treaty... The last thing the United States wants to see is a resumption of nuclear testing or the proliferation of nuclear weapons – and it is the last thing Australia wants to see. By refusing to ratify this treaty, the United States Senate has done a lot to undermine the arms control agenda that the international community, including Australia, has been working on.[13]

However, subsequent policies of the Howard government, including export of uranium to India, and general support for the unilateralist approach of the Bush Administration were seen as undermining the Comprehensive Nuclear Test Ban Treaty and the Nuclear Nonproliferation Treaty.[14] In 1999, Downer played a key role in assisting the United Nations to hold a referendum in East Timor and in negotiating the entry of the INTERFET peace keeping force into East Timor.[15] This intervention attracted the interest of Osama Bin Laden who called for retaliation against Australia and its interests.[16][17][18][19]

In 2003, Downer signed a controversial agreement with the government of East Timor for mining of gas and oil reserves in the Timor Gap.[20] The agreement was criticised as unfair to East Timor and attracted a bipartisan letter of reproach from 50 members of the United States Congress.[21][22][23][24] The reserves were closer to East Timor than Australia but claimed by Australia on the basis of a treaty made with General Suharto in 1989.[25]

As Minister for Foreign Affairs, Downer played a role in the diplomatic dispute known as the Tampa affair in 2001 in which Australia denied permission for the MV Tampa to dock at Christmas Island, having picked up a number of asylum seekers trying to get to Australia by boat. Downer also played a role in the subsequent negotiation of the "Pacific Solution" in which Australia held asylum seekers off-shore in foreign jurisdictions.[citation needed]

In 2003, Downer was accused of not passing on intelligence reports he received before the 2002 Bali bombings. He countered that the warnings were not specific enough to warrant their further release to the Australian public.[26]

In August 2004, he made the claim based on official assessment reports that North Korea's Taepo Dong ballistic missile had a range sufficient to reach Sydney, a view disputed by some.[30]

In 2005, Australian members of the spiritual group Falun Gong launched action against Downer in the ACT Supreme Court alleging that his department had unfairly limited their freedom of expression.[31][32]

The Department of Foreign Affairs and Trade under Downer was accused by Chinese diplomat and defector Chen Yonglin of closely collaborating with the Chinese Embassy in Canberra, even to the extent of "giving suggestions to the Chinese Government on how to handle difficult political cases." Downer was accused of pursuing an unduly strong pro-China policy and failing to address human rights violations adequately.[33]

In March 2006, Downer said the Australian Government opposed selling uranium to India. Downer was quoted as saying "Australia had no plans to change a policy which rules out uranium sales to countries like India which have not signed the UN's nuclear Non-Proliferation Treaty (NPT)." Following the conclusion of the US-India nuclear agreement, the Australian Government said it would export uranium to civil nuclear facilities in India subject to several conditions, one of which was the conclusion of a bilateral safeguards agreement.[citation needed]

In April 2006, he appeared before the Cole Inquiry regarding the oil for food scandal and testified that he was ignorant of the huge kickbacks paid to the Iraq government, despite claims by the Opposition Labor Party that many warnings that had been received by his department from various sources. The Cole inquiry made it clear Downer had been unaware of the kickbacks.

In July 2006, it was claimed that six months before the 2003 invasion of Iraq, Downer had argued that participating in the invasion would be commercially beneficial for Australia. Downer expressed concern that the war might lead to America taking all of Australia's wheat market.[34]

In August 2006, it was claimed by a former weapons inspector Dr John Gee, that Downer had in 2004 suppressed accurate and provable information that the search for weapons of mass destruction in Iraq was fundamentally flawed.[35][36][37] This claim was false.

As Foreign Minister, Downer initially supported the United States Government's incarceration of two Australian citizens, David Hicks and Mamdouh Habib, in the Guantanamo Bay detention camp.[38][39]. Downer later told the US he wanted both released if they were not to be charged. On that basis, Habib was released and Hicks charged

A major challenge for Downer was handling relations with Australia's most important neighbour, Indonesia. Downer negotiated the 2006 Lombok Treaty to put security relations between the two countries on a stable footing, built bilateral co-operation to fight terrorism, people smuggling and illegal fishing. One of the recent difficulties which erupted between Australia and Indonesia was when Australia accepted a boatload of asylum seekers from Indonesia's Papua province in March 2006.[40]

In September 2007, on the sidelines of the 2007 APEC Conference in Sydney, Downer indicated that Australia planned to launch bilateral ministerial-level security talks with the People's Republic of China. Downer also stated, "China is a good partner of Australia. Whatever the differences there are between us in terms of our political systems, human rights issues, China is a very important part of the strategic architecture, the security architecture of the Asia-Pacific region and it's important we have good forums to discuss any issues of that kind with them."[41]

Following the Howard Government's defeat at the 2007 federal election, Downer declined to make a comeback to the leadership and to serve on the Opposition frontbench, amid widespread speculation that he would resign his seat and seek new employment. He subsequently resigned from Parliament on 14 July 2008.[42] His resignation triggered a by-election in the seat of Mayo.

On 3 July 2008, the University of Adelaide announced Downer's appointment as Visiting Professor of Politics and International Trade in the School of History and Politics, including contributions to teaching and research, and work with the University's Institute for International Trade.[43] He was also the vice chairman at Carnegie Mellon University, South Australia.

Also in 2008, Downer discussed the possibility of working as a United Nations envoy to Cyprus with the UN Secretary-General to help revive the peace process.[45] The appointment received the support of the Rudd government, via the Foreign Minister Stephen Smith,[46] and it took effect on 14 July 2008.[47]
He resigned in February 2014 to take up the post of Australia's High Commissioner in London.

He has had a number of board appointments, including the Advisory Board of British strategic intelligence and advisory firm Hakluyt & Company,[48] Merchant Bankers Cappello Capital Corp.,[49] the Adelaide Symphony Orchestra,[50]Huawei in Australia,[51] and the board of Lakes Oil.[52] Downer has said that Huawei should not be considered a potential national security risk.[53] Downer's comments are at odds with an October 2012 US congressional panel's findings that have deemed Huawei a security threat to the US and other nations.[54]

On 10 May 2016, according to The New York Times, Downer met with George Papadopoulos in London and information from this meeting caused the FBI to open a counterintelligence investigation into Russia’s attempts to disrupt the 2016 US Presidential election, and whether there was any involvement by Donald Trump’s associates.[58] Downer told The Australian in an 28 April 2018 interview that, "nothing [Papadopoulos] said in their meeting indicated Trump himself had been conspiring with the Russians to collect information on Hillary Clinton."[59]

In 2017, it was announced that Downer would join UK think tank Policy Exchange as Chair of Trustees. [60] In June 2018, Downer became the Executive Chairman of the International School of Government at King’s College, London. He is a non-executive director of CQS and of Yellow Cake plc

Alexander Downer is married to Nicky (née Nicola Rosemary Robinson), who is a prominent figure in the arts community and was appointed a Member of the Order of Australia in 2005 for her service to the arts.[63] They have four children, Georgina, Olivia, Edward, and Henrietta.

Downer is an enthusiast of V8 car racing and holds a CAMS racing licence.[64][65]

In mid-2014, the Downers sold Brampton House in Mount George,[66] though they intended to return to South Australia in 2017.[67]